Articles of Incorporation

Co-opoly: The Game of Cooperatives

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Unlike bylaws and other policies, Articles of Incorporation must be filed with the state to enable a cooperative to operate as a legal entity. Articles of Incorporation must be re-filed with the state whenever they are changed, so many cooperatives choose to keep their Articles of Incorporation as short and simple as possible. After state and local laws, this document articulates the primary rules governing the co-op.

Before filing, it is necessary to decide how your cooperative will incorporate. Templates, forms, and processing fees are can often be found on your Secretary of State’s website. Examples are widely available online, and some cooperatives post their Articles on their websites. A lawyer can help you write or finalize your cooperative’s Articles of Incorporation. Attorneys can identify issues such as language with unintended consequences and inconsistencies either internal to the document or with state laws.

Articles of Incorporation should include the following information:[1]

  1. Legal name of the cooperative: Be sure to use the exact legal name, rather than a “DBA” (“doing business as”) name. Check your Secretary of State’s online database to make sure the legal name you want to use is not already taken.
  2. Principle place of business: This is fairly self-explanatory. Use your cooperative’s primary business address.
  3. Purpose of the cooperative: This should be briefly and broadly defined, so as not to inhibit future development or expansion.
  4. Period of duration: In most cases, the period of duration will be “perpetual.”
  5. Name, number, and address of the registered agent or statutory agent (in some states, the names and contact information of the officers must also be included):[2] In most states, corporations must designate a registered agent or statutory agent. This individual must be available to receive official documents on behalf of the cooperative. The address provided cannot be a P.O. Box.[3] If a new registered agent is designated (or if new officers are elected, if applicable), the Articles of Incorporation must be updated and re-filed.
  6. Capital structure (stock or non-stock): This article should specify the number of shares authorized and the value of membership stock (and other types of stock, if applicable). Associated voting rights are detailed in the Bylaws, but may be referenced here.[4]
  7. What happens to the cooperative’s assets in the event of dissolution: In the event of dissolution, cooperatives often choose to distribute remaining assets to shareholders. Some cooperatives may distribute remaining assets to allied organizations.[5]


Start-up cooperatives may wish to use this template when drafting Articles of Incorporation.

References

  1. http://madworc.org/sites/madworc.org/files/guideline%20for%20cooperative%20bylaws
  2. http://www.rurdev.usda.gov/rbs/pub/cir7/cir7rpt.htm
  3. http://en.wikipedia.org/wiki/Registered_agent
  4. http://www.unioncab.com/opencms/opencms/about_us/structure/articles.html
  5. http://www.mariposa.coop/?s=articles+of+incorporation
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